Momentum-based indicators, such as a stochastic oscillator and the relative strength index, or RSI, can help you to pinpoint moments of unusually high momentum within a range that can reveal the points at which price is primed to break out of a consolidation zone and head back into a trend. The term "stochastic" simply refers to a system in which one or more variables is uncontrollable, and "oscillator" refers to any indicator whose visible output moves back and forth between an upper and a lower range.

Both stochastics and RSI are considered momentum-based oscillators. As the line begins to move downward from the upper range, it can signal that the price is likely to drop soon, and as the line moves upward from the lower range, it can signal the opposite. David Ingram has written for multiple publications since , including "The Houston Chronicle" and online at Business. As a small-business owner, Ingram regularly confronts modern issues in management, marketing, finance and business law. He has earned a Bachelor of Arts in management from Walsh University.

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It may sound too simplistic first, but stick with me for now and you will soon see the power of this analysis approach. Of course, how fast or how slow and how long the individual periods last changes all the time, but the price can only do one of those three things. The picture below shows you the three possible scenarios and how the market keeps alternating between the phases.

We will shortly see how all price patterns and chart formations are also made up of those moves. Most traders only use bars and candles when it comes to observing charts, but they completely forget about a very effective and simple tool that allows them to look through all the clutter and noise: the line graph. The purpose of bars and candles is to provide detailed information about what is happening on your charts, but is this really necessary when it comes to identifying the overall trend?

Probably not. A trader should zoom out from time to time at least once a week and also switch to the line graph to get a better and clearer picture of what is currently happening.

Trending Markets

And since our only goal here is to identify the trend direction and become aware of the overall situation, the line graph is a perfect starting point. This is my personal favorite way of analyzing charts and although it sounds very simple, it is usually everything you need to understand any price chart.

Conventional technical analysis says that during an uptrend you have higher highs , because buyers are in the majority and push the price higher, and lows are also higher because buyers keep buying the dips earlier and earlier. It works the same during a downtrend: lows are lower when the seller surplus moves price lower and highs are lower because sellers sell earlier and buyers are not as interested. Highs and lows define all market patterns and chart formations.

1. Forex Indicator Ranging Market.
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4. When to Use Ranging Indicators & Trend Indicators in Stocks | Finance - Zacks!

Below we see a Head and Shoulders pattern and this pattern is, of course, also made up of highs and lows. This pattern beautifully shows how transitioning highs and lows describe the shifting power between buyers and sellers.

Try it out and you will be able to describe all market patterns and conventional chart formations using highs and lows. Moving averages are undoubtedly among the most popular trading tools and they are great to identify the market direction as well. However, there are a few things to be aware of when it comes to analyzing trend direction with moving averages.

In the screenshot below we used the 50 EMA which is a mid-term moving average. You can see that during an uptrend, price always stayed well above the moving average and once price has crossed the moving average, it entered a range.

In a range, price does not pay too much attention to moving averages because they fall in the middle of the range, hence average. If you want to use moving averages as a filter, you can apply the 50 MA to the daily timeframe and then only look for trades in the direction of the daily MA on the lower timeframes. Channels and trend lines are another way of identifying the direction of a trend and they can also help you understand range markets much better. Whereas moving averages and the analysis of highs and lows can also be used during early trend stages, trendlines are better suited for later trend stages because you need at least 2 touch-points better 3 to draw a trendline.

I mainly use trendlines to identify changes of established trends; when you have a strong trend and suddenly the trendline breaks, it can signal the transition into a new trend. Trendlines during ranges are ideal when it comes to finding breakout scenarios when price enters the trending mode again.

Also, trendlines can be combined with moving averages nicely because of the complementary characteristics. If you want to learn more about trendlines, take a few minutes and watch our video here: learn how to draw trendlines. The ADX is an indicator that you could use to determine the direction of the trend and for the strength as well. I realize that there are a number of these types already out there, such as ADX, but I'm hoping to find something that works on a percentage scale or something.

• ranging-market.
• Avoiding trading in ranging markets.
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The reason being is that I'm doing research on devising my own grid trading system that will have two modes of trade logic: ranging markets, and trending markets. The Volumes indicator that comes standard with MT4 looks like it could do pretty well for this task, but since it doesn't have a percentage scale, deciding on whether the market is ranging or trending would be left to a person's discretion. I don't need the indicators to be dreadfully accurate or anything, just to give me a general idea as to what is happening. Any and all help is appreciated.

About ranging market we may see here: Forex Market Conditions, a graphic depiction. The rules for ranging market is the following: if the indicator is showing uprend and downtrend in the same time so it is ranging market.

Woodie's choppy zone indicator: many choppy zone indicators from Igorad; original thread. Jurik Woodie CCI: indicators are here. CCI Filter: original thread with indicators and full explanation. Evaluation of the market condition using six SMA indicators: original public thread.

Range Bound Market Strategies Explained

There's volume of the market and there's volume of the broker, do you know which one your broker feeds you? We need to know volume at the broker since that is what we are trading. I think usually they feed you volume for all forex trading.